A court has for the first time blocked the Ministry of Employment and Labor's "bargaining-first" guideline issued after the so-called Yellow Envelope Act, the revised Trade Union Act, took effect. The Seoul Administrative Court on the 18th granted POSCO's request to suspend a National Labor Relations Commission decision on separating bargaining units. The commission had determined that POSCO Holdings (005490.KS) unit POSCO qualifies as an employer of subcontractors' unions, including those affiliated with the Korean Metal Workers' Union under the Korean Confederation of Trade Unions, and ordered a separate bargaining unit to be formed. The court said that if the commission's decision were not suspended, "there is a risk of damage that would be difficult to recover." The ruling only pauses the effect of the commission's determination and is not a decision on the merits finding it unlawful. Still, it carries weight because the court recognized the harm a company would suffer if bargaining proceeded while litigation was under way.
The biggest problem with the law is that the boundaries of a prime contractor's status as an employer remain unclear. The law treats a party as an employer if it can substantially and concretely control and determine working conditions, even without being a party to the employment contract. The difficulty is that disputes continue over what level of work instruction, safety management and prime contractor-subcontractor relationship meets those conditions. Even so, the labor ministry holds that once the commission recognizes employer status, the prime contractor must first proceed with bargaining, and that refusing without justifiable cause can be prosecuted as an unfair labor practice. For companies, refusing the commission's determination means risking criminal punishment, while bargaining before a court ruling amounts to conceding employer status.
The government argues that its implementation guidelines can reduce confusion at industrial sites. But with this court decision, legal disputes between labor and management are likely to increase even when the commission rules on employer status. Large companies are already filing appeals in sharply rising numbers, and the "judicialization of labor relations" is taking hold. There is deep concern that a law revised in the name of promoting labor-management dialogue will become a "dispute promotion act" that only multiplies lawsuits and conflict. The government and the National Assembly should move quickly to pass supplementary legislation rather than rely on implementation guidelines that carry no legal force. Only by clarifying standards on the scope of employer status and on exceptions to bargaining before a ruling on the merits can labor-management conflict be minimized.
